The Pound struggled to make any headway against the Euro and slipped under 1.22 for the first time this year, after the European Central Bank decided against cutting interest rates this month. The UK currency did manage find support just above 1.60 versus the U.S Dollar and staged a rally through 1.6150 last night, as the Pound also made gains against the Australian Dollar. The Bank of England also held interest rates steady at a record low of 0.5% and decided against any further boost to the quantitative easing program from the current level of £375 billion. Sterling did gain some buying support from the decision to expand bond purchases, especially with expectations that the Federal Reserve will continue buying bonds in the short-to-medium term.

The Australian Dollar weakened against the Pound last night after reaching a high of 1.5150, as technical indicators signaled that gains in the currency may have been too rapid. The Aussie Dollar slipped versus most of the 16 most actively traded currencies, after data showed inflation in China quickened more-than-expected and increased concerns that the RBA will face a battle to balance rising prices and growth.

The New Zealand Dollar also came under pressure from a three-week high, as Asian stocks retreated following an earlier advance. The other big mover yesterday was the South African Rand, which weakened severely through the course of the day, amid reports of strike action in the country. Fitch ratings agency also cut South Africa’s credit rating to the second lowest investment grade because of slowing economic outlook and a widening budget deficit.

Data released 11th January

U.K 09:30 Industrial Production (November)

- Manufacturing Output

U.S 13:30 Import Prices (December)

- Export Prices

U.S 13:30 International Trade Balance (November)

U.K 15:00 NIESR GDP Estimate (3 Mths to Dec)

U.S 19:00 Federal Budget Balance (December)

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